Industry News

Study: Housing Blocked Recession in Nation's Top Metro Areas

June 6, 2002

WASHINGTON, DC - Housing's contribution to the growth of the nation's economy in 2001 was 40 percent--nearly twice housing's normal share, according to a new study released[pdf] today by the Homeownership Alliance.

"It says something about the desire of Americans to own their own home that housing's share of GDP continued to rise, even as the economy slowed," said Robert Mitchell, Chairman of the Homeownership Alliance, which commissioned the study to mark National Homeownership Month.

"In many cities, housing's contribution to the growth in local economies was much higher than 40 percent," said Dr. Mark Zandi, co-founder of Economy.com and author of the study.

"Housing activity has been strong from coast-to-coast," added Zandi. "Metropolitan areas as wide ranging as Long Island, Washington, Tucson, Fort Lauderdale, Los Angeles, and Oklahoma City are currently experiencing double-digit, year-over-year house price gains."

"A healthy economy depends on a vigorous, growing housing sector and the study confirms that housing continues to fuel the nation's economy," said Housing and Urban Development Secretary Mel Martinez. "The Bush Administration is committed to expanding homeownership opportunities, particularly for minorities. Homeownership embodies our nation's core values of freedom and self-reliance and has the power to transform individual lives and communities. Today we kick-off National Homeownership Month by helping one family realize the American Dream."

Secretary Martinez kicked off National Homeownership Month with Homeownership Alliance members at a Habitat for Humanity Home Dedication with first-time homeowner Vernetta Young. At the dedication, Secretary Martinez handed over the keys to the house he helped build, "The House the Secretary Built," to Young on the porch of her new home in Northeast Washington, D.C. The home was built as wheelchair accessible to accommodate one of Young's daughters.

"Habitat for Humanity International joins with the Homeownership Alliance and Secretary Martinez to kick-off National Homeownership month and celebrate one family's dream-the Vernetta Young family- the dream of owning one's own home," said Tom Jones, vice president of Habitat for Humanity International and managing director of the Washington Office.

In addition to a look at the top 50 Metropolitan Areas of the country, among Zandi's other findings:

There is no national housing market bubble.

The wealth effect from rising home values and increased homeowner equity boosted consumer confidence and consumer spending. Because of this, housing's indirect and direct contribution amounted to an estimated half of all economic expansion in 2001.

The introduction of flexible low-down payment mortgage products is stimulating homeownership demand, especially among minorities and lower income households.

Total homebuilding is expected to equal nearly 1.85 million units per annum in the next decade. This is substantially more than the 1.7 million unit annual average experienced during the 1990s.

"Despite the positive economic news of the study, there are still millions of minority and lower income families, women-headed households, new Americans and other groups significantly lagging behind the average national homeownership rate," concluded Mitchell. "We must work together to create innovative and effective new ways for more families to achieve the dream of homeownership."